January Jobs Shocker: Payrolls Explode By 353K, Double The Expected And Higher Than All Estimate As Wages Surge

February 2, 2024   |   Tags:
January Jobs Shocker: Payrolls Explode By 353K, Double The Expected And Higher Than All Estimate As Wages Surge

Well, we did warn readers that anyone hoping for a negative print in an election year would be disappointed, and moments ago the BLS proved us right.

With Wall Street expecting continued declines in the pace of monthly jobs growth, and consensus looking for a decline from last month's 219K print to 185K, the BLS decided to once again obliterate late-cycle logic and common sense, and damn your mass tech layoff torpedoes...

... it reported that in January the US created a ridiculous 353K jobs...

... double the 185K expected, and higher than than the highest forecast estimate, which as a reminder was 300K. In fact, as shown below, this was a 4-sigma beat to expectations...

... and putting the beat in the context of the past year, it was an absolute blowout:

What is notable is that once again there was a huge dispersion between the Establishment and Household Surveys, and while the former indicated an increase of 353K, the latter reported a drop in Employment of 31K!

Indeed, as the next chart shows, it's safe to assume that all Establishment Survey numbers are now completely made up.

Not only that, but while the US allegedly added 353K jobs, and employment dropped by 31K, full-time jobs actually declined by 63K and part-time jobs surged by 96K,

Clearly none of that mattered to the BLS, however, which had just one mission: to make the Biden economy look double super good-good ahead of the November elections, and it wasn't just payrolls which blew away expectations, the unemployment rate also slipped, staying at 3.7%, vs expectations of an increase to 3.8%. That said, Among the major worker groups, the unemployment rates for adult men (3.6 percent), adult women (3.2 percent), teenagers (10.6 percent), Whites (3.4 percent), Blacks (5.3 percent), Asians (2.9 percent), and Hispanics (5.0 percent) showed little or no change in January.

The labor force participation rate, at 62.5%, was unchanged in January, and the employment-population ratio, at 60.2%, was also little changed.

Some more stats from the Household survey:

  • In January, the number of people employed part time for economic reasons, at 4.4 million, changed little. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
  • The number of people not in the labor force who currently want a job, at 5.8 million, was little changed in January. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.
  • Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force changed little at 1.7 million in January. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, increased to 452,000 in January.

More notable was the sudden jump in wages, with the BLS reporting that average hourly earnings increase 0.6% from December (and double the 0.3% estimated increase), rising 4.5% YoY, also blowing away estimates of a 4.1% increase.

But, in keeping with the endless gimmicks by the BLS, this is not because of an actual wage increase but because people literally worked less (the denominator in the average hourly earnings equation) as the average workweek for all employees on private nonfarm payrolls decreased by 0.2 hour to 34.1 hours in January and is down by 0.5 hour over the year, down to the lowest level seen in the depths of the covid crisis.

To be sure, a big reason why none of today's numbers made any sense is because this was the report when the annual revisions are made, and while we will have more to say on that, one can see the clear difference in payrolls (and estimates) before and after revisions below:

Looking at a breakdown of jobs by sector (from the rigged Establishment survey), we find the following:

  • Professional and business services added 74,000 jobs in January, considerably higher than the average monthly increase of 14,000 jobs in 2023. Over the month, professional, scientific, and technical services added 42,000 jobs. Employment in temporary help services changed little over the month (+4,000) but is down by 408,000 since reaching a peak in March 2022.
  • In January, employment in health care rose by 70,000, with gains in ambulatory health care services (+33,000), hospitals (+20,000), and nursing and residential care facilities (+17,000). Job growth in health care averaged 58,000 per month in 2023.
  • Retail trade employment increased by 45,000 in January but has shown little net growth since early 2023. Over the month, general merchandise retailers added 24,000 jobs, while electronics and appliance retailers lost 3,000 jobs.
  • Employment in social assistance rose by 30,000 in January, reflecting continued growth in individual and family services (+22,000). Employment in social assistance grew by an average of 23,000 per month in 2023.
  • Employment in manufacturing edged up in January (+23,000), with job gains in chemical manufacturing (+7,000) and printing and related support activities (+5,000). Manufacturing experienced little net job growth in 2023.
  • Government employment continued to trend up in January (+36,000), below the average monthly gain of 57,000 in 2023. A job gain occurred in federal government (+11,000), and employment continued to trend up in local government, excluding education (+19,000).
  • In January, employment in information continued its upward trend (+15,000). Employment in motion picture and sound recording industries increased by 12,000, while employment in telecommunications decreased by 3,000.
  • Employment in the mining, quarrying, and oil and gas extraction industry declined by 5,000 in January, following little net change in 2023. Over the month, a job loss in support activities for mining (-7,000) was partially offset by a job gain in oil and gas extraction (+2,000).
  • Employment showed little change over the month in other major industries, including construction, wholesale trade, transportation and warehousing, financial activities, leisure and hospitality, and other services.

We will have more to say on this report, but the bottom line is simple: the Biden administration has clearly tasked the BLS to make the labor market as strong and hot as possible ahead of November. Needless to say, this will make the Fed's job very difficult as any rate cuts will be very, very difficult to pass now with a FOMC consensus (of course, inflation will keep easing since the jobs numbers are totally bogus and made up, and in reality the labor market is shrinking fast but we have election coming). As such, the BLS has been terminally discredited and any indications of the true state of US employment will have to come at the macro level, like tracking individual corporate layoffs and other alternative metrics. This also means that trading in 2024 is going to be very difficult since most if not all "fundamental" data will be rigged to appear much stronger than it is, until eventually everything snaps. Biden's hope - of course - is that this happens after November...

Tyler Durden Fri, 02/02/2024 - 09:33


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